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Thursday, March 22, 2018

10 Accounting Basics You Need to Know to Run a Successful E-commerce Business

Accounting is a painful necessity.

It’s the boring side of the business. I don’t like dealing with it either.

But, if you want your business to grow, you can’t avoid it.

You could try tossing all your receipts into a shoebox and handing them to a stranger.

But you’ll be handing them financial control. That means risking the success of your business.

You’d be handing them a nice chunk of change to do it all for you too.

I promise it’s not as complex as you might fear, though.

And you shouldn’t need an accountant for day-to-day management.

Even if you do pay for help, you should still know the basics yourself.

This way you can understand and question what someone is telling you.

After all, it’s your business at stake.

The following ten accounting basics will cover everything you need to know to understand your money and ask the smart questions.

1. Get yourself accounting software

Don’t try to piece it all together using excel or a calculator.

Do yourself a favor and get accounting software. Freshbooks is marketed to customers who run e-commerce businesses.

Or if you use Shopify, there are a bunch of accounting software apps you can get right in their app store.

Not sure what you want? Test out a free one. Or pick one with a 30-day free trial.

The best option will depend on your business and preferences.

If you’re shopping through the app store, make sure you’re picking a bookkeeping system.

Look for an app that will track sales, costs, and inventory.

Avoid apps that only create invoices or just provide reports. You want a tool that can do it all for you.

Whether you pick software through Shopify or go with something else, pick one that will sync directly to your e-commerce store.

It will make life a whole lot easier.

2. Track your cash flows

Step two: watch your cash.

If you don’t have a separate bank account for your business yet, get one.

You need to know that your business is making money. And the easiest way to see this is to watch your cash flow.

If you have more coming in then going out, you’re probably doing well, right?

You also should be watching the timing of money going out and coming in.

After all, what if all your bills are due tomorrow?

It won’t matter a whole lot if you have $1 million coming in next month if you can’t pay your employees until then.